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- Thousands of jobs at risk as The Body Shop calls administrators
Thousands of jobs at risk as The Body Shop calls administrators
- Business Advice
Peninsula Team, Peninsula Team
(Last updated )
Peninsula Team, Peninsula Team
(Last updated )
Three months after a private equity deal, The Body Shop has called in administrators from FRP Advisory
The move puts thousands of jobs at risk and delivers another blow to the High Street.
Body Shop has over 2,500 employees and more than 200 shops across the UK, but was hit by poor trading over the Christmas period.
The ethical beauty brand was known for its stance against animal testing and was set up by Anita and Gordon Roddick in 1976 in Brighton.
Tony Wright, Geoff Rowley and Alastair Massey of FRP Advisory have been appointed as joint administrators.
It was only bought by private equity firm Aurelius last November for £207m from Brazilian owners, Natura &Co Holding SA, with full operational control only in place from 1 January.
In a statement on the decision to appoint administrators, the owners Aurelius said: ‘Taking this approach, provides the stability, flexibility and security to find the best means of securing the future of The Body Shop and revitalising this iconic British brand.
‘The joint administrators will now consider all options to find a way forward for the business and will update creditors and employees in due course.’
The Body Shop will continue to trade as normal with shops and the website remaining open.
Reflecting on recent trading conditions, Aurelius said: ‘The Body Shop has faced an extended period of financial challenges under past owners, coinciding with a difficult trading environment for the wider retail sector.
‘Having taken swift action in the last month, including closing down The Body Shop At Home and selling its business across most of Europe and in parts of Asia, focusing on the UK business is the next important step in The Body Shop’s restructuring.’
The Body Shop reported annual turnover of £408m for year end December 2022, down from £487m the previous year, with pre-tax losses of £71m [FY21: £7m profit]. When the results were reported, the company said the losses were driven by the ‘challenging and competitive retail environment’, exacerbated by rising inflation and interest rates, the cost of living crisis and weak consumer confidence.
Auditors PwC earned over £2.1m in audit fees for the company, subsidiaries and the ultimate parent company, but did not flag any fundamental problems when it signed off the FY22 accounts. However, there was some restructuring, including senior management changes in January 2023, before the business was put up for sale in August 2023.
Despite the difficult trading environment, Aurelius bought the Body Shop only three months ago, so making the decision to put the business into administration came as a surprise so soon after the multimillion pound investment last autumn.
Matthew Padian, partner at law firm Stevens & Bolton, said: ‘The scale of the restructuring embarked upon by Aurelius is quite surprising.
‘It’s not immediately clear whether they are looking to use the administration of the UK business as a way to extract the valuable from the poor performing parts of the business or whether this is seen as a way to walk away from the UK business altogether.
‘It’s clear that the fortunes of the UK retail sector remain very much in the balance. Rising costs and subdued consumer demand remain a common theme. Yet, the pendulum seems to be swinging back in favour of brick and mortar retailers, with the number of internet-only retail failures rising sharply in recent months and online-only retailers having to open physical stores to stay relevant to consumers.
‘What fate awaits the UK portfolio of the Body Shop stores remains to be seen. Surviving stores will need to think carefully about how they might reposition themselves. Cruelty-free cosmetics is not the niche it once was, and it seems possible that the Body Shop might just be another business with a strong history, which has failed to keep pace with the demands of the modern and arguably fickle consumer.’
The overseas part of the business run on a franchise basis is not affected by the UK administration.
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- Thousands of jobs at risk as The Body Shop calls administrators
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